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Valuation Effects of Seasoned Global Equity Offerings

By R. Errunza and Darius P. Miller


Abstract: This paper examines the shareholder wealth effects associated with global equity offerings made by foreign firms after their initial cross listing in the United States. We document that the market reaction to seasoned global equity offerings is economically and statistically insignificant. However, it is 1.5 percent larger than the market reaction to offerings made on local exchanges only. In addition, we find that the adverse market reaction to local equity offerings is mitigated as more capital is raised globally. Our findings support the hypothesis that global capital raising is associated with significant benefits

Topics: Werner (the referee, Steve Foerster (the discussant) and seminar participants at the conferences “The
Year: 2002
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